For years, AT&T worked tirelessly to erode its customers’ legal rights, using mouse print in its terms of service preventing consumers from participating in lawsuits against the company. Instead, customers were forced into binding arbitration, where arbitrators employed by the company unsurprisingly rule in their employer’s favor a huge percentage of the time. Initially, the lower courts derided this greasy behavior for what it was: an attempt by AT&T to eliminate customer legal rights and save a buck. And with AT&T’s massive history of fraud, you can imagine AT&T was looking to save quite a bit.
But in 2011 the Supreme Court’s AT&T Mobility v. Concepcion ruling declared that what AT&T was doing was perfectly ok. While lower courts saw this as an “unconscionable” abuse of consumer rights and the law, the Supreme Court bought into the ongoing myth that binding arbitration is a hyper-efficient, modern alternative to class actions. And again this week, the highest court in the land again proclaimed that this kind of sleazy fine-print is perfectly ok.
For a few years now DirecTV (ironically now owned by AT&T) customers have been trying to sue the satellite provider over its early termination fee (ETF) policies. A California court had invalidated the binding arbitration clause in DirecTV’s contract with customers, since DirecTV’s contract language stated that such a provision was unenforceable if the “law in your state” contradicted it. Unsurprisingly, this week’s 6-3 ruling in DirecTV Inc. v. Imburgia (pdf) reiterated the 2011 federal ruling trumps all:
“No one denies that lower courts must follow this Court’s holding in Concepcion. The fact that Concepcion was a closely divided case, resulting in a decision from which four Justices dissented, has no bearing on that undisputed obligation. Lower court judges are certainly free to note their disagreement with a decision of this Court. But the “Supremacy Clause forbids state courts to dissociate themselves from federal law because of disagreement with its content or a refusal to recognize the superior authority of its source.”
If you’re solely looking at the precedent set by Concepcion, that of course makes legal sense. Breyer (who dissented on the original ruling) is simply telling lower courts they must adhere to the federal ruling, even if they don’t agree with it. Of course that doesn’t magically make the original ruling good, nor does it obfuscate the fact that the Supreme Court is just as polluted as Congress when it comes to partisan patty cake and corporate influence.
In short, the Supreme Court bought into the myth that arbitration is a hyper-efficient alternative to the greed of class action lawsuits, even though there’s an endless ocean of data highlighting how that’s simply not the case. Class action lawsuits are indisputably obnoxious for all the usual reasons (I got $1 and the lawyer got a new boat!). But occasionally class actions do benefit consumers and force change (especially on the telecom front), and until the people complaining construct a better mouse trap, class actions are often the best bad idea we’ve got.
The Supreme Court’s alternate-reality belief that arbitration is a sane alternative is notably worse. Since AT&T’s original win, countless companies from banks to video game vendors now foist binding arbitration upon consumers, forcing them into a rigged apparatus where consumers lose the vast majority of the time, companies pay smaller amounts then ever before, and there’s less meaningful change than ever. Thanks to the Supreme Court, that’s something we’ll all get to enjoy for many, many years to come.